The Audit Committee Designates SD BioScience as Auditor for 2 Years Over 'Investment Company Loss Amount Reduction'

Shinhan Accounting Corporation and Two Affiliated CPAs Restricted from Audit Work
Fines to Be Decided at Future FSC Regular Meeting

[Asia Economy Reporter Ji Yeon-jin] The Securities and Futures Commission under the Financial Services Commission announced on the 9th that it has decided to designate an auditor for 2 years for SD BioScience, a KOSDAQ-listed company that disclosed financial statements violating accounting standards. It also decided to restrict audit work for the accounting firm and certified public accountants affiliated with the company who violated audit standards while auditing the company's financial statements. The fines for both parties will be determined at a future regular meeting of the Financial Services Commission.

SD BioScience understated the loss amount of its invested subsidiaries in the financial statements for 2018 and 2019. The amount of understated impairment losses was approximately 11 billion KRW (3.2 billion KRW on a separate basis) for 2018 consolidated financials, and 11 billion KRW (2.7 billion KRW on a separate basis) for 2019.

The Securities and Futures Commission stated, "While preparing and disclosing the financial statements, there were signs of impairment in the investment stocks of subsidiaries, but impairment evaluations were not performed, resulting in understated impairment losses."

Additionally, Shinhan Accounting Corporation, the external auditor of the company, was recognized for negligence in audit procedures and was subjected to a 2-year audit work restriction for SD BioScience and an additional 30% contribution to the joint compensation fund.

Two certified public accountants affiliated with Shinhan Accounting Corporation were subjected to audit work restrictions for SD BioScience (2 years and 1 year respectively), a 1-year audit work restriction for designated listed companies, and job training measures.